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E&J Gallo Case Study

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Submitted By gangaman1992
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E & J Gallo Winery is a winery and distributor in Modesto, California. Two brothers Ernest Gallo and Julio Gallo founded E & J Gallo Winery in 1933. In 2006 wine in the United States represented a $28 billion industry with 716 million gallons sold. 92 million gallons were desert wines. The desert wine segment is 8% of US wine sales so it’s not that important in the wine industry. According to time Thunderbird and Night train account for less than 3% of sales for Gallo, although Gallo's brands make up 16.1% of the dessert wine category. The redeeming features would be both brands, although thought to be "wino" drinks, provide an entry to the market place for some drinkers. They are sweet, and more palatable to the new drinker as well as readily available. The key success factors in the dessert wine segment have been placement of this product. Supermarkets, corner liquor stores, warehouse clubs carry it. Like it or not it is a staple on the shelves. These wines were the beginning of Gallo and it was not until the late '70's that Gallo started doing premium wines and wine coolers (80's). At first the premium wines were marketed without Gallo's name on them. Now, as years have passed and Gallo's various premium wines have won acclaim the Gallo name is on the premium wine, and not on the dessert wines. While there is not a strategic fit per se between the two there is an economy of scale present and both Gallo and the liquor distributors/ retailers benefit by the company offering a wide range of products. This helps with bracket buying, merchandise assistance, and signage. Gallo is offering a product that the market is demanding. They are not forcing anyone to buy the product. They are merchants, producing a product that sells. There have been many calls for the products to be taken off the shelf by homeless advocates, and in Seattle there was a move to ban the

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